A Report on Budgets and Control in Highgrove Manor Hotel.

Authors Avatar

A Report on Budgets and Control in Highgrove Manor Hotel

Introduction

In past few years Highgrove Manor Hotel has experienced a rapid development-----from a small country house hotel to a the nationally recognised four-star hotel, but at the moment, it was confronted with some problems-----more intense competition, bank pressure, increased interests, and falling conference trade. The hotel needs to set budgets and exercise control within its business for surviving in the competition and achieving its long-term objectives. This report is going to explain and illustrate how the budget setting process of Highgrove Manor Hotel should be organized and what control procedures should be introduced. The report focuses on the short-term budgeting process, and highlights the sequence of the various tasks and the person responsible for each task.

The Budget Setting Process

A budget is an important instrument of planning, coordination, motivation, and control. The Highgove Manor Hotel can benefit a lot from the budgets. Budgets can promote forward thinking and identification of the problems in the hotel. If the problems are identified early enough, it allows mangers time to overcome them. Sometimes managers can avoid making mistakes. Budgets can coordinate the activities of various sections of the hotel and allocate the resources to the various departments, which ensure every department operate in the harmonious way in the hotel. Another important role of budgets is to motivate the managers and staff at the hotel to better performance. The reasonably budgeted targets could exploit the potential of managers and staff, and encourage them to do utmost to achieve it. In addition, the budgets provide the basis for the control, which is to monitor and measure the actual performance of the hotel. Budgets could be the most logical yardstick with which to compare the actual performance. The top management can find out the existing problems and solve them in Highgrove Manor Hotel.

The budget setting process consists of the following steps:

First step is to determine who are responsible for budgeting. The top management should establish the budget committee in Highgrove Manor hotel, which is responsible for overall matters relating to the budgets and for coordinating the preparation of budgets in the hotel. This committee should consist of the managers in key functional areas in the hotel, such as manager of accommodation department, manager of human resources department. Red Bassett, marketing manager should be one of members of the budgeting committee, and Jane Black, management accountant of the hotel should be appointed as the budget officer, who is going to carry out the tasks of committee, which are to handle the disputes of the hotel relating the budgets, and coordinate the individual budgets into a budget for the whole hotel.

The second step is that all the members of the budgeting committee should know the objectives of Highgove Manor Hotel, and also be familiar with the strategic and long-term plans of the hotel. The objectives of the hotel reflect where the hotel is going, and strategic plan work out the overall strategies of the hotel, including the mission statement. It also set out the broad direction for the hotel. The series of long-term plans set out how the objectives will be pursue, which always last 5 years. The budgets are set to fulfil the long-term plans, which are always set annually. budgets are set within the framework of the long-term plans of the hotel. It is, in fact, the implementation of the long-terms plans. Without familiarity with the objectives, strategic plan, and long-term plans of the hotel, the budgeting committee cannot properly produce the budgets for Highgrove Manor Hotel.

Join now!

Before the annual budgets are prepared, the budget committee should determine a base from which the budget process will begin. Because the time-consuming and high cost of Zero-base Budgeting, which ask managers to start at zero budget level every year, and justify all the cost as if the activities involved were being initiated for the first time. The budgeting committee could choose the Incremental Budgeting, which is concerned mainly with the increment in operation or expenditures that will happen during the budget period. It takes into account current expenditure plus an estimate of next year’s expenditure to arrive at the ...

This is a preview of the whole essay